We see a lot of bears wearing the above Tee these days.

This post will be short and sweet as we are getting ready to board a long flight and will be radio silent until next month.

As we expected last Thursday,

It wouldn’t surprise us if the market begins to internalize our analysis about the yield curve and then deludes itself into thinking it can have relatively strong growth with long-term interest rates heading toward zero.  A nutcracking short-covering rally would ensue.  – GMM, Aug 15th

The nutcracker has taken us back into that 5 percent four top trading range, which began in January 2018 and peaked on July 26th (see chart) and right into some major resistance.

Key Levels

The S&P couldn’t hold and closed today just below the key .50 Fibo retracement for this correction at 2926.75, which is almost a gimme from here.  The next levels are last week’s high at 2940.91, the 50-day at 2945.82, and then the .618 Fibo at 2950.64.  Formidable resistance.

We are sellers here and don’t think stocks can clear these hurdles unless we get a surprise in Jackson Hole on Friday or Trump backs down on his new round of tariffs set for September 1st.  We don’t think it’s probable but not impossible, so these convictions are loosely held.

AMF

See you in September.   We are looking forward to getting back in the game after the recharge for  The Hunt For Red October!

Until then, bappy hunting!